Envirotech Vehicles (EVTV) shares more than quadrupled on Monday after the Nasdaq-listed firm signed a preliminary letter of intent to merge with Azio AI, setting a reference price of $3 a share.

Investors cheered EVTV also because Azio has secured a $107 million contract from a government in Southeast Asia.

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According to its co-chief executive Chris Young, the contract “demonstrates our ability to deploy secure, mission-critical AI infrastructure at scale.”

Despite the explosive rally today, EVTV stock is trading at a fraction of its price only in early 2025.

A potential merger with Azio will transform Envirotech Vehicles from a niche electric vehicle (EV) maker into a business offering exposure to artificial intelligence (AI).

This may attract a premium multiple to EVTV shares in the months ahead, especially since the $3 reference price implies substantial upside from current levels.

Moreover, the $107 million government contract adds credibility and near-term revenue visibility, reinforcing confidence in the merger’s strategic value.

Together, this narrative fueled speculation, driving momentum in Envirotech Vehicles on Monday.

While Envirotech Vehicles remains a highly speculative penny stock, its technicals, nonetheless, suggest further upside in the near term.

The explosive surge on Jan. 12 pushed EVTV shares decisively above their major moving averages (50-day, 100-day, 200-day), indicating bulls are now firmly in control across multiple timeframes.

Additionally, the stock’s medium-term relative strength index (50-day) remains at about 59 only, reinforcing that the upward momentum may not be out of juice just yet.

In short, at 0.3x sales and less than $10 million in market cap, EVTV is an exciting speculative bet that may offer exponential returns on even modest operational improvements or new contracts.

Investors should note, however, that Envirotech Vehicles stock does not currently receive coverage from Wall Street analysts.

This means EVTV stock is unlikely to sustainably attract institutional capital, and investors are on their own in assessing risks and valuing its future prospects.

On the date of publication, Wajeeh Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com